Looking beneath the surface

August 01, 2009

Amidst the Hype - Signs of a Breakdown

So the reduction in the GDP number is less than was feared - Hooray! What is going on with our media? The headlines are as boosterish as they were as we went into this crisis. Every glimmer of a green shoot is heralded as a breakthrough.

I am working in the 32 worst hit states in the US and I can tell you from looking at them every day - times for people are getting worse. A Katrinaesque America is emerging but there are no headlines. You have to search to find it. For now.....

The largest county in Alabama - includes Birmingham - is literally falling apart:(NYT)

In every part of Jefferson County
— Alabama’s most populous county and its main economic engine —
government managers have been scrambling to prepare for Saturday, when
two-thirds of county employees eligible for layoffs — up to 1,400 —
will be lost in an effort to stave off financial ruin.

Basically all government services are stopped - even burial!

There is a pattern here. The most corrupt and the most inept and the most politically divided states and cities are the first to fall - unable to cope with the complexities of the collapse in tax revenue.

Jefferson County, which includes Birmingham, could be compared to a
person who has lost his job, watched his retirement investments
evaporate and is stuck with a house that is worth less than what he
owes the bank. Some of the county’s woes stem from the financial crisis
that has pounded so many communities: its sales and property tax
revenues are down by $40 million, and it borrowed billions in a sewer bond boondoggle
that is the municipal equivalent of a subprime mortgage, using failed
exotic bond deals and swaps concocted by investment bankers.

But
the county has additional troubles: the sewer project was riddled with
corruption, and in January a court ruled that a tax the county relied
on for more than a quarter of its general fund was illegal because the
Legislature repealed it in 1999.

State lawmakers could easily
fix that problem by re-enacting the tax, but deliberations have dragged
on even as the county has halted road maintenance, delayed opening a
courthouse, announced plans to close half its customer service
locations and asked department heads to submit the names of those who
would be laid off on Saturday.

As I learn more about California, Michigan, New York and New Jersey - I wonder. The fabric of where people live is unraveling.

Comments

Amidst the Hype - Signs of a Breakdown

So the reduction in the GDP number is less than was feared - Hooray! What is going on with our media? The headlines are as boosterish as they were as we went into this crisis. Every glimmer of a green shoot is heralded as a breakthrough.

I am working in the 32 worst hit states in the US and I can tell you from looking at them every day - times for people are getting worse. A Katrinaesque America is emerging but there are no headlines. You have to search to find it. For now.....

The largest county in Alabama - includes Birmingham - is literally falling apart:(NYT)

In every part of Jefferson County
— Alabama’s most populous county and its main economic engine —
government managers have been scrambling to prepare for Saturday, when
two-thirds of county employees eligible for layoffs — up to 1,400 —
will be lost in an effort to stave off financial ruin.

Basically all government services are stopped - even burial!

There is a pattern here. The most corrupt and the most inept and the most politically divided states and cities are the first to fall - unable to cope with the complexities of the collapse in tax revenue.

Jefferson County, which includes Birmingham, could be compared to a
person who has lost his job, watched his retirement investments
evaporate and is stuck with a house that is worth less than what he
owes the bank. Some of the county’s woes stem from the financial crisis
that has pounded so many communities: its sales and property tax
revenues are down by $40 million, and it borrowed billions in a sewer bond boondoggle
that is the municipal equivalent of a subprime mortgage, using failed
exotic bond deals and swaps concocted by investment bankers.

But
the county has additional troubles: the sewer project was riddled with
corruption, and in January a court ruled that a tax the county relied
on for more than a quarter of its general fund was illegal because the
Legislature repealed it in 1999.

State lawmakers could easily
fix that problem by re-enacting the tax, but deliberations have dragged
on even as the county has halted road maintenance, delayed opening a
courthouse, announced plans to close half its customer service
locations and asked department heads to submit the names of those who
would be laid off on Saturday.

As I learn more about California, Michigan, New York and New Jersey - I wonder. The fabric of where people live is unraveling.